Government regulation of a natural monopoly causes its average cost curve to shift downward.

Name: Government regulation of a natural monopoly causes its average cost curve to shift downward.
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Question

Quizplus · Accepted Answer

Government regulation typically aims to control prices or output levels in a natural monopoly, not directly alter the firm's cost structure. The average cost curve's position is determined by the technology and scale of production, not regulatory measures.

Government Regulation of a Natural Monopoly Causes Its Average Cost